Friday, July 27, 2012

Entrepreneurs, get over yourself when dealing with investors!

Steli Efti yesterday wrote this great post about how many entrepreneurs get insecure when dealing with investors, even though they in most other circumstances are very confident in their idea and ability to execute. Read it! It is both fun and true.

I would add to Stelis post that this kind of insecurity often expands into a larger problem in the phase leading up to different funding rounds for a startup, where a lot of choices seem impossible or inevitable based on the premise of getting funded. "If we don't sign this deal or hire this person we will not get fundning!"These kind of "we have no choice" decisions can haunt a startup for years and worst case, ultimately lead to its demise.

Of course you are thinking, "Well that is easy to say, but this is the only investor that has shown any interest in our idea and team and we will do whatever it takes to land their investment!".

I feel for you. I really do.

But having been in similar situations I can say that yes, your actions to land this investor might give you your coveted investment, but as a consequence you may just have narrowed your long term probability of success by 50-75% by making poor strategic choices, hiring wrong people, bringing the wrong kind of investor on board as well as creating a destructive pattern for how you as an entrepreneur deal with investors.

I am not saying that you can not make any compromises when dealing with investors, you always have to, but always consider their strategic impact, and never forget, there are other investors out there.